Central London Net Effective Rents Monitor
Q3 2025

Our Central London Net Effective Rents Monitor illustrates the combined impact of changes to both prime headline rents and the typical length of rent free periods across 22 central London districts.

The Index also reflects different lease lengths by providing analysis of five and ten year leases, which can have a significant impact on the net effective rent for each district.

Note: the impact of the timeframe for the ingoing tenant to carry out its fitting out works has not been factored into the Carter Jonas net effective rent analysis simply because the timeframe will be influenced by the quantum of space to be leased.

Key trends

• In Q3 2025, headline rents (as an average across the whole market) in central London's prime office market increased by 0.4%. Although this is a deceleration from the 1.3% growth reported in Q2 2025, the sustained upward trend underscores the ongoing imbalance between demand and supply in the grade A office market.
• Prime headline rental growth eased to 3.9% in the year to Q3 2025, compared to 5.6% in the prior quarter.
• Rental growth this quarter was led by non-core submarkets, specifically Docklands and West London, supported by the availability of larger floorplates and their relative affordability.
• Docklands’ Canary Wharf district, where post-pandemic recovery has lagged, was the strongest performer in Q3, with headline rents up by 4.5%. This marks the first upward movement in any Docklands’ district since Q4 2022.
• Prime rental growth has also returned to West London’s White City district for the first time in 12 months. The district followed closely behind Canary Wharf, posting a 4.3% increase in headline rents over the quarter.
• Rental levels were broadly flat across all other districts during the quarter. Yet, on an annual basis, several districts continued to show strong rental growth. In particular, Marylebone in the West End submarket has seen prime headline rents rise by 15.6% since Q3 2024, and Mayfair and St James’s has seen annual rental growth of a similar 15.5%.
• In the City of London, the banking and insurance district saw a modest reduction in typical rent free periods of one month, reflecting declining vacancy in the Grade A market segment. Typical rent free periods are unchanged in all other central London submarkets.
• The contraction in rent free periods over the last 12 months across central London has boosted prime net effective rents (assuming a 5-year lease), which increased by an average of 0.5% from Q2 2025 to Q3 2025. Year-on-year, net effective rents are 4.3% higher.
• Figure 1 illustrates the change in prime net effective rents in central London and its key submarkets over the last quarter and the last 12 months (to Q3 2025).

Figure 1

Quarterly trends by submarket and district

• Prime headline rental growth of 0.4% was recorded in Q3, primarily driven by rising rents across the Docklands and West London submarkets. Prime net effective rents (assuming a 5-year lease) ended the quarter 0.5% higher.
• Although prime headline rents in the City of London/South Bank submarket remained unchanged, net effective rents (5-year lease) increased by a marginal 0.2% in Q3.
  • The submarket’s Bank/Leadenhall Street district saw typical rent free periods reduce slightly, reflecting a more constrained supply of well-located grade A space compared to a year ago.
  • However, it is still routinely possible to get a 24-month rent free period on a 10-year lease commitment as landlords see the positive impact of a longer lease on investment yields.

• In the West London submarket, prime headline rents rose by an average of 2.2%. This was underpinned by rental growth in the White City district, where rents rose by 4.3% over the quarter to reach an average of £60.00 per sq ft.
  • White City is benefitting from its proximity to Imperial College London, which has attracted businesses affiliated with the University’s research facilities. The district also continues to draw in creative industries and technology firms, largely due to its appealing campus-style environment which is greener than neighbouring districts yet still in an urban setting.
  • Headline rents in White City were priced below Hammersmith two years ago but now command a premium for space of comparable quality, driven by the factors outlined above.

• Docklands’ prime headline rents have remained flat for three years, but Q3 2025 signalled a positive shift with an increase of 1.8%.
  • Growth was concentrated in the Canary Wharf district, where leasing momentum has started to build. As a result, prime headline rents in the district rose by 4.5% to £57.50 per sq ft.
  • Several key trends are driving this: tenants with large footprints have renewed their leases, some have expanded or committed to increasing their space, and a more diverse range of occupiers is entering the market beyond the traditional banking sector.
  • The most notable transaction in Q3 was HSBC’s leasing of 210,000 sq ft at 40 Bank Street, Canary Wharf in addition to the bank’s earlier commitment to pre-let the entirety (c.556,000 sq ft) of Panorama St Paul’s in the City.
  • Canary Wharf benefits from higher levels of Grade A vacancy, compared with the more central sub-markets, which could accommodate large space requirements, as well as increased connectivity with the Elizabeth Line, while still being relatively affordable.

• Elsewhere, headline rents and typical rent free periods remained broadly flat during Q3.

Annual trends by submarket

• Annual change in net effective rents (assuming a 5-year lease) as an average across all the central London submarkets decelerated to 4.3%, down from 6.0% in Q2. Yet, this remains significantly above the five-year average growth rate of 2.3%, highlighting an ongoing imbalance between demand and supply for prime office space.
• The West End submarket reaffirmed its position as the top performer, posting an impressive 8.1% annual growth in net effective rents (5-year lease). This continues a trend of consistent and resilient rental growth which peaked at 9.4% in Q1 2024.
• The City of London/South Bank submarket recorded a 4.2% annual increase in net effective rents (5-year lease), easing from 7.5% in the previous quarter as the impact of Q3 2024’s strong rental growth rolls off.
• Net effective rents (5-year lease) in West London as an average across the submarket have risen by 2.2% year-on-year, reflecting an uplift in prime rents in Q3.
• The Docklands submarket showed signs of recovery in Q3 with 1.8% annual growth in net effective rents (5-year lease). This is the first annual growth since Q4 2022.

Annual trends by district

• The top 10 performing districts in the 12 months to Q3 2025 by prime net effective rental growth are illustrated in Figure 2.
• Robust annual performance in the West End was largely fuelled by strong year-on-year increases in the submarket’s Marylebone and Mayfair and St James’s districts, with 15.6% and 15.5% growth, respectively. With minimal changes in typical rent free periods, the supply and demand imbalance in both districts is being reflected in rising headline rents.
• In the City of London/South Bank submarket, the fastest annual growth was recorded in South Bank district, with net effective rents on five-year leases rising by 9.4%, bolstered by two sizeable transactions in Q2 (PayPal and Lego at 76 Southbank).
• After leading the market in Q2, the Bank/Leadenhall Street district continued to perform strongly in Q3, posting a 6.2% annual uplift in net effective rents (five-year lease), albeit at a moderated pace from the previous quarter’s 19.1%.
• White City entered West London’s top 10 districts for annual rental growth, with net effective rents (5-year lease) rising by 4.3%.
• Annual growth in East London was focussed entirely in the Canary Wharf district, with minimal movement in Crossharbour and Stratford, which have remained largely unchanged since Q3 2021.

Figure 2

Figure 3

Longer term trends

• The change in net effective rents (expressed as an index) since 2020 across central London’s submarkets is shown in Figure 3. This illustrates the strong upward trajectory in prime rental levels post pandemic across central London’s submarkets.
• Growth in prime net effective rents moderated in the City of London/South Bank, Midtown and West End submarkets in Q3, but accelerated in Docklands and West London after a prolonged period of sluggish performance.
• Following a strong upward trajectory, the West End submarket has now climbed 34.1% from the bottom of the market in early 2021, underpinned by robust demand and limited vacancy.
• The Mayfair and St James’s districts in the West End have led the recovery from the market trough, with net effective rents (5-year lease) now standing 65.5% above their lowest level. The Victoria and Westminster district (also in the West End) recorded the second-highest overall growth during this period, rising by 35.4%, although rental growth has been relatively slower in recent quarters.
• Prime net effective rents in Docklands and West London are now 5.9% and 5.7% higher than the pandemic low, respectively. However, despite these gains, both remain below their pre-Covid peak, with Docklands 4.3% and West London 1.9% lower.

Figure 4

Outlook

Occupier demand

The central London office market continues to be characterised by a lack of available, grade A space relative to demand. Net leasing activity has been positive in recent quarters, with take-up outpacing the delivery of new space through the refurbishment and development processes, which is maintaining upward pressure on headline rents.

There have been several high-profile lettings during Q3 – including the HSBC letting at 40 Bank Street referred to above. However, some large-space occupiers have chosen to abandon their property searches deciding, instead, to stay put for several reasons including cost and the lack of available suitable alternatives.

With several active requirements for large floorplates and growing expectations that occupiers will continue to reassess their needs and expand their footprint (some reversing downsizing decisions made during the pandemic), we expect demand to remain robust.

Artificial intelligence (AI) is also having an increasingly visible impact on the office market. While some companies have cited AI as a reason for reducing headcount - potentially leading to smaller office footprints – the net impact of AI on demand for central London office space is, we believe, likely to be positive, reflecting the UK’s status as a global AI innovation hub.

Supply

With historically low immediately available space in the prime grade A market segment, occupiers are increasingly entering into pre-letting agreements on new developments that are under construction to secure operationally suitable space ahead of rivals.

At the end of Q3, 40.5% of new office buildings or refitted space (by floor area) due to complete in the next 12 months have been pre-let (Glenigan and Carter Jonas research). While still a notable proportion, this is down from 49.4% at the end of Q2. With headline rents continuing to rise and confidence in occupier demand remaining strong, landlords are not feeling as much pressure as in recent years to secure pre-lettings, opting instead to wait for optimal terms.

Upward pressure is likely to continue on rents for super-prime space in the West End submarket and the upper floors of landmark City tower buildings, driven by supply-side constraints and sustained occupier demand for premium locations.

Occupiers are expected to continue exploring outlying submarkets where there is more choice available on terms that are generally more competitive. In Docklands, in particular, we can expect to see further modest rental growth as occupiers struggle to secure space that falls within budget in more central locations and look to Canary Wharf as a viable solution.

© Carter Jonas 2025. The information contained in this review is provided for general reference purposes only. While every effort has been made to ensure accuracy at the time of publication, no guarantee is given as to its completeness, reliability, or suitability for any particular purpose. We do not accept any liability for decisions, actions, or outcomes arising from the use of this data, including its use in business decisions or other formal proceedings. Any reliance placed on this information is strictly at the user's own risk. This data is not intended to replace professional advice. Users rely on this data at their own risk and should seek independent professional advice. Use of this data does not imply endorsement of any third-party conclusions.